• Indonesia’s CCUS strategy builds on its huge carbon storage capacity and the dominance of hard-to-abate sectors, primarily, oil & gas. The country is working to meet its domestic emissions reduction targets while preserving key economic activities. 

• Indonesia’s storage potential goes beyond domestic needs. With surplus capacity, it can serve as a regional CCUS hub, partnering with countries like Singapore, Japan and South Korea to help them manage industrial emissions and advance their net-zero goals. 

• Flagship projects like Tangguh and Gundih, alongside supportive regulations such as MEMR 2/2023 and Presidential Regulation 14/2024, are laying the groundwork. Yet challenges of regulatory clarity, financing, and public acceptance remain; Solutions include international partnerships, financial incentives, and better environmental safeguards. 

Introduction 

Carbon Capture, Utilization, and Storage (CCUS) is quickly shifting from a niche environmental technology to a critical pillar of energy security, economic development and the global net-zero transition. For countries like Indonesia with large industrial bases and fossil-fuel legacies, CCUS offers a way to decarbonize existing industries without dismantling them, instead allowing them to assimilate environmental protection frameworks within their operations. As Indonesia is Southeast Asia’s largest economy and one of the major traditional energy producers, it is evolving as an unexpected but increasingly important player in the CCUS landscape. 

Indonesia’s growing CCUS ambitions are primarily driven by their domestic energy transition, net-zero goals, and pressure from a changing regional energy market––where carbon pricing, trade measures like CBAM, and corporate net-zero commitments are reshaping industrial competitiveness. However, this analysis would be incomplete without understanding how Indonesia’s CCUS strategy is also reshaping the geopolitical dynamics across the Indo-Pacific. Indonesia is not just developing CCUS to meet their domestic emissions targets, but they are positioning themselves as a regional carbon storage hub and playing a strategic role with forward-looking political and economic effects. 

Indonesia’s Climate Goals and Industrial Drivers 

This outward-facing ambition is rooted in Indonesia’s own climate architecture and its enormous potential. Indonesia’s CCUS strategy is anchored in its long-term climate plans under its Enhanced Nationally Determined Contribution. As reported in the UNFCCC report, Indonesia has committed to reducing emissions by 31.89% through domestic effort or 43.2% through international support by 2030, and is aiming for net zero emissions by 2060 or sooner. CCUS is explicitly included in the government’s Long-Term Strategy for Low Carbon and Climate Resilience and the National Energy Policy. 

Indonesia has one of the largest estimated CO₂ storage potentials in Asia and has been focused on tapping into these resources to meet these climate goals. Government assessments have identified 400 to 600 gigatons of potential storage capacity, primarily within depleted oil and gas fields across regions of Java, Sumatra, and Kalimantan. This assessment even exceeds Indonesia’s domestic emissions goals and shows a surplus that could be monetized through regional carbon storage services. 

Sectoral Fit and Economic Stakes 

Indonesia’s industrial structure makes CCUS especially relevant as their hard-to-abate sectors, including oil & gas, cement, and steel, depend on high-heat, carbon-intensive processes. These industries collectively account for roughly 38% of Indonesia’s total exports, increasing the economic risks of aggressive phaseout strategies. Oil and gas alone account for $55.53 billion, which is 21% of total exports, while iron and steel contribute $25.8 billion, or 9.7% of exports. While cement is primarily consumed domestically, with nearly 65 million tons annually. This is mirrored in Indonesia’s emissions profile with the energy sector projected to emit 551 MtCO₂ emissions by 2030, while industrial processes add 100 MtCO₂, with cement responsible for 7- 8% of national CO₂ emissions. These industries are expected to remain central to Indonesia’s economy for decades, so CCUS offers a feasible pathway to decarbonize them without having to reduce these industries. 

The IEA’s CCUS roadmap highlights that Indonesia has projected that capture volumes will be increasing from 6 MtCO₂/year in 2030 to 190 MtCO₂/year by 2060, spearheaded by high-purity CO₂ from oil and gas processing, and then followed by a large-scale increase from cement after 2035 as well as gradually by steel and chemicals. In this context, CCUS is not just an environmental tool for Indonesia; it is an industrial and trade strategy critical to preserving Indonesia’s economic backbone while making progress towards their long-term climate goals. 

There are two major regulations that govern CCUS within Indonesia: MEMR Regulation No. 2/2023 and Presidential Regulation No. 14/2024. MEMR Regulation No. 2/2023 establishes technical, permitting, and operational requirements for CCUS in the upstream oil and gas sector, providing the first legal clarity for capture, transport, injection, and storage activities. This was followed by the more transformative Presidential Regulation No. 14/2024, which enables cross-border CO₂ transport and foreign storage, as it sets out long-term liability provisions, and defines the commercial architecture for CCUS projects, including revenue-sharing and post-closure obligations. These regulatory steps demonstrate a serious political commitment while opening the door for foreign emitters to store their CO₂ in Indonesia. 

Regional Positioning and Geopolitical Dynamics 

Domestically, Indonesia’s CCUS project pipeline has already grown from small pilot studies into one of the most ambitious portfolios in Southeast Asia. More than 15 CCUS and CCS projects are now under assessment by the Energy Ministry, led by major international and domestic energy players. The flagship is BP’s Tangguh CCUS project, targeting 1.8 million tons of CO₂ per year by 2026, with future expansion integrated into the Ubadari development. Pertamina, in collaboration with JOGMEC, is advancing the Gundih CCS project, which would be the country’s first full-chain pilot. The company is also assessing large-scale hubs in East Kalimantan and Java. Beyond these domestic projects, Indonesia is exploring ways to leverage its storage potential regionally. Feasibility studies with ExxonMobil, Chevron, and Mitsubishi Heavy Industries are examining multi-client CO₂ hubs that could store emissions from both Indonesian industries and regional partners lacking domestic storage capacity. 

The multi-client CCUS hubs being studied  hint that Indonesia is now preparing to store CO₂ that doesn’t originate within its borders. This is the moment the CCUS narrative stops being purely domestic. When your neighbors cannot meet their net-zero goals without your geological resources, CCUS stops being a technology and starts becoming leverage. 

Indonesia’s neighbors – Singapore, Japan, South Korea, and Taiwan – face limited to no domestic storage capacity, so Indonesia can anchor a cross-border carbon management system. Singapore is actively pursuing bilateral storage agreements and has signed an MoU to enable cross-border CO₂ transport and storage. Japan, through the Asia CCUS Network led by Ministry of Economy, Trade and Industry (METI), is promoting Indonesia as a priority overseas storage destination. South Korea’s SK E&S and Pertamina also signed a 2022 MoU to explore more CCUS collaboration with potential Korean CO₂ export to Indonesia on its radar. 

This kind of cross-border storage gives Indonesia a strong foot in energy diplomacy, as they negotiate bilateral agreements and long-term partnerships with other key regional players who can benefit from its CCUS potential. In addition, Indonesia’s engagement with multilateral initiatives like the Asia Zero Emission Community (AZEC) and the Asia CCUS Network also provide platforms for coordinating smoother technology transfers and building into their already existing capacity while shaping regional carbon governance. With its involvement in these forums, Indonesia has the opportunity to influence standards, guide cross-border carbon markets, and secure both economic and strategic benefits. They can view CCUS as not just a decarbonization tool, but as a means for regional influence and geopolitical engagement. 

Partnerships with BP, ExxonMobil, JOGMEC, Chevron, and ENI are already showing promising success in this by bringing in foreign capital, technology, and expertise while helping Indonesia scale its projects. Indonesia is also positioning itself for emerging global carbon markets. Projects like Tangguh could generate stored-carbon credits aligned with future Article 6 mechanisms under the Paris Agreement, which create international frameworks for trading emissions reductions and carbon credits between countries to meet their climate targets, potentially turning Indonesia into a regional carbon services hub while supporting other countries’ climate goals. If executed well, Indonesia could become a carbon services exporter. They could sell these credits and provide carbon storage services to other countries. 

Challenges and Solutions 

Despite Indonesia’s strong potential in CCUS, there are several challenges that need careful attention for this level of scaling and collaboration to work. One of the main issues is the fragmented and unclear regulatory framework, which does not address long-term responsibility for CO2 storage insurance and risk management, nor does it address concerns about accepting foreign CO2 in regards to compromising Indonesia’s national sovereignty. Indonesia’s Presidential Regulation 14/2024 provides the basic legal foundation for CCUS, but the next step is to develop clear implementing guidelines and a transparent permitting system. In doing so, Indonesia is looking at foreign governments’ regulatory models, like Norway’s Northern Lights and Australia’s Gorgon CCS projects, for guidance on best practices. Rather than the projects themselves, they are taking inspiration from practices to inform their own legal and operational standards. 

CCUS also remains expensive and typically costs between $50 and $120 per ton depending on capture and transport. Indonesia currently lacks a national carbon price, large-scale subsidies, and commercial infrastructure for moving CO₂, factors that would incentivize industry to invest in CCUS. To address this, the government and private partners are exploring financial incentives, pilot transport projects, and public-private partnerships. But Indonesia still has much more to do. As they are working to establish a domestic carbon market, they need to tap into international climate finance to make CCUS projects commercially viable and financially sustainable. 

There is also the matter of public perception and social acceptance, where some communities and civil society groups have raised concerns that CCUS could extend fossil fuel use or turn Indonesia into a carbon storage destination for other countries, in line with the pollution haven theory within environmental economics. The government is responding to this by promoting transparency, local benefits such as jobs and technology transfer, and strong environmental safeguards to ensure public trust, but more work is needed to demonstrate that CCUS is both a climate solution and an economic opportunity. Indonesia’s CCUS strategy is more than a climate-technology rollout, as there is immense potential to become Southeast Asia’s CCUS leader, supporting both domestic decarbonization and regional emissions reduction by leveraging its geological endowment and strategic geography. But Indonesia must ensure there is regulatory clarity, financial viability, environmental safeguards, and guidelines for accepting foreign CO₂. If it succeeds, CCUS could become not only a climate imperative but also an economic and geopolitical opportunity that reshapes Indonesia’s relationships with Japan, Singapore, South Korea, and global energy companies. 

Indonesia’s CCUS trajectory will help determine how Southeast Asia decarbonizes and who leads the transition.